50Statesof

Q3 2018 Quarterly ReportExecutive Summary

SOLAR

NC CLEAN ENERGYTECHNOLOGY CENTER October 2018

The 50 States of Solar: Q3 2018 Executive Summary | 1

AUTHORS

Autumn Proudlove

Brian Lips

David Sarkisian

The NC Clean Energy Technology Center is a UNC System-chartered Public Service Center

administered by the College of Engineering at North Carolina State University. Its mission is to

advance a sustainable energy economy by educating, demonstrating and providing support for

clean energy technologies, practices, and policies. The Center provides service to the

businesses and citizens of North Carolina and beyond relating to the development and adoption

of clean energy technologies. Through its programs and activities, the Center envisions and

seeks to promote the development and use of clean energy in ways that stimulate a sustainable

economy while reducing dependence on foreign sources of energy and mitigating the

environmental impacts of fossil fuel use.

CONTACT

Autumn Proudlove (afproudl@ncsu.edu)

ACKNOWLEDGMENTS

We would like to thank Tom Stanton of the National Regulatory Research Institute for his review

of a draft of this report.

PREFERRED CITATION

North Carolina Clean Energy Technology Center, The 50 States of Solar: Q3 2018 Quarterly

Report, October 2018.

COVER DESIGN CREDIT

Cover design is by Capital City Creative.

COVER PHOTO CREDIT

Photo by Wayne National Forest. “Wayne National Forest Solar Panel Construction.” July 15,

2009. CC-By 2.0. Retrieved from https://www.flickr.com/photos/waynenf/3725051641

Photo by North Carolina Clean Energy Technology Center. “Training Class – PV Installation.”

April 25, 2014.

The 50 States of Solar: Q3 2018 Executive Summary | 2

DISCLAIMER

While the authors strive to provide the best information possible, neither the NC Clean Energy

Technology Center nor NC State University make any representations or warranties, either

express or implied, concerning the accuracy, completeness, reliability or suitability of the

information. The NC Clean Energy Technology Center and NC State University disclaim all

liability of any kind arising out of use or misuse of the information contained or referenced within

this report. Readers are invited to contact the authors with proposed corrections or additions.

PREVIOUS EDITIONS AND OTHER 50 STATES REPORTS

Full editions of and annual subscriptions to the 50 States of Solar may be purchased at

https://commerce.cashnet.com/NCSU-NCCETC. Previous executive summaries of The 50

States of Solar are available here:

Q2 2018 Executive Summary

Q1 2018 Executive Summary

Q4 2017 and 2017 Policy Review – Executive Summary

Q3 2017 Executive Summary

Q2 2017 Executive Summary

The NC Clean Energy Technology Center also publishes the 50 States of Grid Modernization

and the 50 States of Electric Vehicles on a quarterly basis. Executive summaries of these

reports may be found here. Please contact us for older issues of the 50 States of Solar.

The 50 States of Solar: Q3 2018 Executive Summary | 3

ABOUT THE REPORT

PURPOSE

The purpose of this report is to provide state lawmakers and regulators, electric utilities, the

solar industry, and other stakeholders with timely, accurate, and unbiased updates on state

actions to study, adopt, implement, amend, or discontinue policies associated with distributed

solar photovoltaics (PV). This report catalogues proposed and enacted legislative, regulatory

policy, and rate design changes affecting the value proposition of distributed solar PV during the

most recent quarter, with an emphasis on the residential sector.

The 50 States of Solar series provides regular quarterly updates of solar policy developments,

keeping stakeholders informed and up to date.

APPROACH

The authors identified relevant policy changes through state utility commission docket searches,

legislative bill searches, popular press, and direct communication with stakeholders and

regulators in the industry.

Questions Addressed

This report addresses several questions about the changing U.S. solar policy landscape:

How are state legislatures, regulatory authorities, and electric utilities addressing fast-

growing markets for distributed solar PV?

What changes to traditional rate design features and net metering policies are being

proposed, approved, and implemented?

Where are distributed solar markets potentially affected by policy or regulatory decisions

on community solar, third-party solar ownership, and utility-led residential rooftop solar

programs?

Actions Included

This report series focuses on cataloging and describing important proposed and adopted policy

changes affecting solar customer-generators of investor-owned utilities (IOUs) and large

publicly-owned or nonprofit utilities (i.e., those serving at least 100,000 customers). Specifically,

actions tracked in these reports include:

The 50 States of Solar: Q3 2018 Executive Summary | 4

Significant changes to state or utility net metering laws and rules, including program

caps, system size limits, meter aggregation rules, and compensation rates for net

excess generation

Changes to statewide community solar or virtual net metering laws and rules, and

individual utility-sponsored community solar programs arising from statewide legislation

Legislative or regulatory-led efforts to study the value of solar, net metering, or

distributed solar generation policy, e.g., through a regulatory docket or a cost-benefit

analysis

Utility-initiated rate requests for charges applicable only to customers with solar PV

or other types of distributed generation, such as added monthly fixed charges, demand

charges, stand-by charges, or interconnection fees

Utility-initiated rate requests that propose a 10% or larger increase in either fixed

charges or minimum bills for all residential customers

Changes to the legality of third-party solar ownership, including solar leasing and

solar third-party solar power purchase agreements (PPAs), and proposed utility-led

rooftop solar programs

In general, this report considers an “action” to be a relevant (1) legislative bill that has been

passed by at least one chamber or (2) a regulatory docket, utility rate case, or rulemaking

proceeding. Introduced legislation related to third-party sales is included irrespective of whether

it has passed at least one chamber, as only a small number of bills related to this policy have

been introduced. Introduced legislation pertaining to a regulatory proceeding covered in this

report is also included irrespective of whether it has passed at least one chamber.

Actions Excluded

In addition to excluding most legislation that has been introduced but not advanced, this report

excludes a review of state actions pertaining to solar incentives, as well as more general utility

cost recovery and rate design changes, such as decoupling or time-of-use tariffs. General

changes in state implementation of the Public Utility Regulatory Policies Act of 1978 and

subsequent amendments, including changes to the terms of standard contracts for Qualifying

Facilities or avoided cost rate calculations, are also excluded unless they are related specifically

to the policies described above. The report also does not cover changes to a number of other

policies that affect distributed solar, including solar access laws, interconnection rules, and

renewable portfolio standards. Details and updates on these and other federal, state, and local

government policies and incentives are available in the NC Clean Energy Technology Center’s

Database of State Incentives for Renewables and Efficiency, at www.dsireusa.org.

The 50 States of Solar: Q3 2018 Executive Summary | 5

EXECUTIVE SUMMARY

OVERVIEW OF Q3 2018 POLICY ACTION

In the third quarter of 2018, 45 states plus DC took a total of 157 actions related to distributed

solar policy and rate design (Figure 1). Table 1 provides a summary of state actions related to

DG compensation, rate design, and solar ownership during Q3 2018. Of the 157 actions

catalogued, the most common were related to DG compensation rules (44), followed by

residential fixed charge and minimum bill increases (42) and community solar (28).

Table 1. Q3 2018 Summary of Policy Actions

Policy Type # of Actions % by Type # of States

DG compensation rules 44 28% 27 + DC

Residential fixed charge or minimum bill increase 42 27% 26

Community solar 28 18% 16 + DC

DG valuation or net metering study 21 13% 16

Residential demand or solar charge 16 10% 7 + DC

Third-party ownership of solar 3 2% 2 + DC

Utility-led rooftop PV programs 3 2% 3

Total 157 100% 45 States + DC

Note: The “# of States/ Districts” total is not the sum of the rows, as some states have multiple actions. Percentages are rounded

and may not add up to 100%.

TOP FIVE SOLAR POLICY DEVELOPMENTS OF Q3 2018

Five of the quarter’s top policy developments are highlighted below.

Kansas Corporation Commission Approves Demand Charge for Westar Residential

Distributed Generation Customers

Kansas regulators approved Westar Energy’s proposed mandatory residential demand charge

for distributed generation customers in late September 2018. The decision follows a 2017

Commission order finding that additional fees for customer-generators are appropriate. The

approved charge is applicable to demand during system peak hours and varies seasonally.

Michigan Utilities File Net Metering Successor Implementation Proposals

Two Michigan utilities – DTE Energy and Upper Peninsula Power Company (UPPCO) –

proposed new distributed generation customer tariffs as part of general rate cases filed during

The 50 States of Solar: Q3 2018 Executive Summary | 6

Q3 2018. The proposals implement a net metering successor decision made by the Public

Service Commission in April, moving to a net billing structure that credits customers at either

the power supply rate or locational marginal price for exported energy. Both utilities also

proposed system access contributions based on the capacity of the customer’s distributed

generation system.

Figure 1. Q3 2018 Action on DG Compensation, Rate Design, & Solar Ownership

Policies

Short-Term Net Metering Compromise Reached in South Carolina

Early in Q3 2018, Duke Energy Carolinas announced that it had reached its aggregate cap on

net metering in South Carolina. New customer-generators would no longer have the option of

net metering, but would be able to participate in a buy-all, sell-all program, receiving avoided

cost rate compensation for production. Later in the quarter, the utility and stakeholders reached

an agreement to continue offering net metering until March 2019.

New Mexico Regulators End Standby Charge for Distributed Generation Customers

In September 2018, the New Mexico Public Regulation Commission approved the Hearing

Officer’s recommendation to end Xcel Energy’s standby charge for residential and small

The 50 States of Solar: Q3 2018 Executive Summary | 7

commercial customers with distributed generation. Xcel had proposed an increase in the

charge as part of a general rate case, but the Hearing Officer found that the charge was not

supported. The Commission plans to open a rulemaking to address standby charge issues.

Figure 2. Q3 2018 Action on Solar Policy & Rate Design, By Number of Actions

Arizona Regulators Deny Tucson Electric Power and UNS Distributed Generation Rate

Design Proposal, Approve Net Billing Credit Rates

In a September 2018 decision, the Arizona Corporation Commission approved initial

distributed generation export credit rates for Tucson Electric Power (9.64 cents/kWh) and UNS

Electric (11.5 cents/kWh), while denying the utilities’ proposed demand charge and system

capacity-based charge. Regulators found that the cost of service study approach was flawed

and directed the utilities to file a new study.

The 50 States of Solar: Q3 2018 Executive Summary | 8

THE BIG PICTURE: INSIGHTS FROM Q3 2018

Resurgence in Proposals for Distributed Generation Customer Fees

Activity related to additional fees, such as demand charges, for distributed generation (DG)

customers slowed during 2017 and early 2018, but is now quickly picking back up. In Q3 2018,

three utilities – DTE Energy (MI), Upper Peninsula Power Company (MI), and NorthWestern

Energy (MT) – proposed additional fees for DG customers, while regulators in Kansas

approved Westar Energy’s proposed demand charge for residential DG customers. In West

Virginia, proposed revisions to the state’s net metering rules potentially open the door to

additional fees by allowing charges for the “incremental cost of interconnection” of customer-

generators. In Massachusetts, a demand charge approved earlier in 2018 was overturned by

legislation enacted in Q3 2018; however, the legislation only establishes new requirements for

the design of demand charges, and does not disallow them.

Grid Planning and DER Compensation Efforts Converging on Locational Value

Distribution system planning and solar compensation discussions are growing closer together,

as states look to grid planning processes to provide greater information on the locational value

that distributed energy resources (DERs) provide. The Public Utilities Commission of Nevada

approved distributed resource planning rules in Q3 2018, requiring an evaluation of the

locational benefits and costs of DERs. Proposed distribution system planning rules in Missouri

and Washington both consider the locational value of DERs, with Washington’s draft rules

explicitly calling for tariffs and rate designs that compensate customers for the value of their

DERs. The New Hampshire Public Utilities Commission is planning to conduct a distribution

locational value study to inform net metering successor discussions, and Illinois’ NextGrid draft

working group report addresses the use of integrated distribution planning to identify the

locational value of DERs.

States and Utilities Considering Meter Cost Allocation

Several states and utilities are considering whether the customer or the utility should bear the

cost of installing additional meters, such as a bidirectional meter for net metering or a separate

production meter. Proposed net metering rule revisions in West Virginia would change the

financial responsibility for a bidirectional meter from the utility to the customer. Meanwhile, a

settlement in Duquesne Light Company’s general rate case in Pennsylvania requires the

installation of production meters for new net metering customers, to be paid for by the utility.

An Arizona decision approves a monthly meter fee for DG customers of Tucson Electric Power

and UNS Electric, and in Maine, regulators recently determined that customers are not

responsible for the cost of the production meter necessary to comply with the state’s new DG

compensation rules.

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FULL REPORT DETAILS & PRICING

FULL REPORT DETAILS

Content Included in the Full Quarterly Report:

Detailed policy tables describing each pending and recently decided state and

utility action regarding:

o Net Metering

o Distributed Solar or DG Valuation

o Community Solar

o Residential Fixed Charge and Minimum Bill Increases

o Residential Solar Charges (Demand Charges, Standby Charges, & Grid

Access Charges)

o Third-Party Ownership

o Utility-Led Rooftop Solar

Links to original legislation, dockets, and commission orders for each policy

action

Excel spreadsheet file of all actions taken during the quarter

Summary maps of action for each policy category above, including a separate

Powerpoint file of all summary maps

Qualitative analysis and descriptive summaries of solar policy action and trends

Outlook of action for the next quarter

WHO SHOULD PURCHASE THIS REPORT

The 50 States of Solar allows those involved in the solar and electric utility industry to

easily stay on top of legislative and regulatory changes. The report provides a

comprehensive quarterly review of actions, an undertaking that would take any one

business or organization weeks of time and thousands of dollars in staff time. At a cost

of $500 per issue (or $1,600 annually), the 50 States of Solar offers an invaluable time

and financial savings. With direct links to original sources for all actions, customers may

stay on top of legislative and regulatory developments between quarterly reports.

Solar Installation and Manufacturing Companies

Identify new market opportunities, as well as changing and risky markets

Stay on top of state policy developments relevant to your business

The 50 States of Solar: Q3 2018 Executive Summary | 10

Give your own team a head start in tracking legislative and regulatory

proceedings

Investor-Owned and Public Power Utilities

Learn about the approaches being taken by other utilities facing similar

challenges

Stay on top of relevant state policy developments

Utilize an objective source of information in legislative and regulatory

proceedings

Investors and Financial Analysts

Identify new investment opportunities and emerging areas of growth, as well as

risky investments

Access rate data that is often buried in regulatory filings

Advocacy Organizations

Learn about the diverse solar policy and rate proposals in other states

Learn about the outcomes of other state’s policy and rate decisions

Utilize an objective source of information in legislative and regulatory

proceedings

Researchers and Consultants

Access valuable data requiring an immense amount of time to collect first-hand

Identify research needs to inform solar policy and rate design proceedings

Cite an objective source in your own research and analysis

PRICING

Visit https://commerce.cashnet.com/NCSU-NCCETC to purchase the full 50 States

of Solar Q3 2018 Quarterly Report.

Customer Type Annual Subscription Single Report – Current Quarter

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The 50 States of Solar: Q3 2018 Executive Summary | 11

COMPLIMENTARY COPIES FOR POLICYMAKERS

We offer complimentary copies of the 50 States of Solar to policymakers and

regulators (limited to federal and state legislators and staffers, utility commissioners,

utility commission staff, state consumer advocate office staff, and state energy office

staff). Contact us to receive a complimentary copy of the most recent report if you fall

into one of the categories above.

CUSTOMIZED SOLUTIONS

The NC Clean Energy Technology Center also offers customized policy research and

analysis services. Visit http://www.dsireusa.org/services/ to learn more.